Are liabilities assets that are owned by creditors?

Question

Expressed in dollar amounts. A company's net worth is its assests subtracted by it liabilities. Correct? The only dollar amount that the company truly owns its the net worth?

Answer 1

Liabilities are what is owed to suppliers/creditors, etc. They are not generally backed with specific assets. So, your statement would be incorrect as it applies to the company with the liability. However, the creditor would show the customer's liability as an asset, generally Accounts Receivable or something similar.

Answer 2

Im not sure exactly what your asking, but let me try to answer.

On your books liabilities are just that, something you are financially liable for. On the creditors books it will be listed as an asset as a receivable.

UPDATE: I think I see where you are going. The company "owns" its assets. Regardless of whether it is paid for or not, the asset balance is what they "own" or will be collecting (in the case of receivables). The accounting equation that must always remain true is that Assets must equal liabilities plus equity (A=L+E). So the net value would be taking the assets, minus the liabilities and equity (i.e. buying back shares from shareholders). Keep in mind though, that in the case of a liquidation or sale of a company, adjustments and settlements may be made that will shift the net value once adjusted for in the General Ledger. Does this make sense?

Answer 3

It depends on your perspective. A loan, for example, shows up as a liability for the lessee (borrower) and an asset for the lessor (creditor).

However, you may be asking a slightly different question: assets of your company that are secured by creditors, e.g. equipment on a capital lease, are still treated as assets on the books of the borrower. The corresponding capital lease would show up on the balance sheet as a matching liability.

Answer 4

Yes, I guess you could say that. Liabilities are debts that are usually secured over our assets which means the creditor has first call on the asset if we default on the loan.

Answer 5

Liabilities refer to amounts you owe. Creditors only own something if you default on the payment, that is what a lien is. SO for example, you have a car and a car loan. The bank owns the car with you until it is paid off. If you pay it off, the banks name comes off the title and it is yours, free and clear. If you don't pay, the bank can take the car, sell it and pay off the loan, since the are technically owners as well.

Answer 6

All debts to creditors are liabilities to the debtor and assets to the creditors, however, not all liabilities are assets to the creditors.

Answer 7

liability for you is an "accounts recievable" for the creditor.